Archive for November 2016

Overreacting Solves Nothing


Chicken Little and her children.

Chicken Little is in true form this week as the election in the States surprised many. The headlines this morning on CNBC echo and increasing level of alarm: Anti-Trump Portland Protest Turns Into a Riot; Op-Ed: I’m not worried about a US recession, I’m worried about another Great Depression; Trump’s enemies are already paying the price; Donald Trump tweets about unfair protests — then has second thoughts; An ‘ugly period’ for the market is drawing near: Saxo Bank economist.

I haven’t seen such overreacting since, well, I don’t know when. There is certainly a lot not to like about Trump, but overreacting will not make it better. The stock market is rallying on higher interest rates. Financials are doing well while much of the market is down. Overall we saw a nice rally and it might, or might not, be overdone. Over at CNBC again we hear: Cramer warns the rally is ‘getting out of hand’ —better deals found in the trash. Really! Yeah, the market will pull back at some point and there is no reason for stocks to be higher due to a guy winning an election who hasn’t even started his first day on the job.

Interest rates rising rapidly bear watching and could be a problem for housing and the economy as a whole, but as of now the SKY IS NOT FALLING! There are reasons for concern. Unless you are a white man there has been vitriol spewed toward you from the President-elect over the past few years.

Overreacting solves nothing. Rioting certainly doesn’t. Playing into the hand of violence never works. Taking a proactive approach is the only solution. The people most shocked are the ones who worked so hard campaigning for another candidate. I get it. I’ve worked hard for a long period to watch a project utterly fail. But it wasn’t the end. I learned a lot throughout the process. You need to focus your efforts, using what you learned to facilitate change.

People make America great. The guy with the second highest tally of votes won the Electoral College and the election. It isn’t the first time it has happened. And I bet you have experience working with people of less than the highest caliber. We all have. As frustrating as it can be at times, we need to engage our Stoic training. Complaining and whining is not allowed! Read More

Reality Check: Calm in the Face of Panic


Pinky could care less who won the election. She is happy with a clean litter box, a bowl of fresh food , and a scratch behind the ears.

It is 3:30 in the morning and I just discovered who our next president will be. I had a nice nap earlier, but tend to sleep in fits and starts which is great for quiet writing time in the middle of the night. I’ll probably take another nap later this morning so I will be awake and alert. Back to the election.

The news reports say the Canadian immigration website collapsed from the deluge of visitors. Stock markets are down around the planet, but from what I read it is better than what it was earlier. One newsfeed had pictures of crying Hillary Clinton fans. It seems like the world is ending for people who worked so hard for their candidate.

There will be pain in the weeks and months ahead. There would be pain in the weeks and months ahead regardless who won the election. This is reality. America is undertaking a grand experiment. It isn’t the first time we walked the road less traveled. My political position is unimportant, but I will share my vote so you understand I am not writing this from the victor’s side. I voted for Hillary and had my reasons. None of that matters now. Trump will be the next President of the United States.

The Root of Panic

There is plenty to be concerned with. An untested politician jumps straight to the top. What could go wrong? Well, lots can go wrong. But a lot is always going wrong. We lived through a Civil War, two world wars, victories and defeats. And life kept chugging along. Now is not the time to panic. (There is never a good time to panic.) Read More

Credit Card Secrets

We think of credit cards as those things which allow us to manage our financial lives without carrying money around. Bills are easy to automate with credit cards and paying the card at the end of the month is a simple, one-time, setup online and it is paid in full on the due date without any further action on your part. Even if you don’t record your spending, a credit card has a nice list of all your spending in one neat, compact location for future review.

Those crisp pieces of plastic come with a dark side also. Without constraint, you can dig a financial hole difficult to crawl out of. Make no mistake; credit cards are debt, even if you pay them in full monthly. Debit cards serve the same purpose and are not debt because it comes out of your bank account; when the money runs out, the purchases are declined.*

Previous posts discussed bonuses, cash-back credit cards, and interest free/fee free loans. I consider those the easy benefit of credit cards. Debit cards offer limited bonuses and cash back, but credit cards take it to a whole new level.

There are a lot more benefits to credit cards most people either don’t know about or never take advantage of. I seek to end that problem now. These benefits are worth anywhere from a few hundred dollars a year to thousands, depending on your level of spending and the items/services purchased with the card. Read More

Permanent Interest Free Loans

debt-1Credit cards were always a powerful cash management tool for business owners. Individuals can harness the same power, but frequently use credit cards wrong, piling on high interest debt, and suffering financially. In times past, credit cards allowed for easy payment and tracking of expenses. As banks grew more competitive, the opportunities also grew. Most people are familiar with cash-back and bonus offers when opening a new credit card, but there is so much more.

There is a whole additional universe of value available from credit cards missed because it is buried in fine print. In this post we will focus on one of those benefits: interest free loans. Tomorrow I will focus on the litany of advantages you can use to make your life simpler.

Interest free loans from credit cards are not for everyone. I will focus on three groups who should find value in the strategy I will soon outline. The three groups are: people digging out of debt, people interested in accelerating their investments in index funds, and individuals and business with seasonal revenue.

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Why Keep Working?

img_20161103_233136It had to happen sometime and now was that time. As soon as traffic reached a certain level someone would finally say what was on everyone’s mind: Why are you doing it, Mr. Accountant? If you are so damn rich, why do you bust your ass running a tax practice and writing more copy than Stephen King on meth? The answer seems so simple to me, but I have seen this sickness before.

My buddy, Pete, over at Mr. Money Mustache faced similar comments in the past. Now that the guy publishes around two times a month no one is talking, but they all wish he did write more. (Way to go guys!) Recent comments on The Wealthy Accountant have now touched on the subject. The comments are very polite and not derogatory by any means. That is not always the case. The comment in question casts doubt on all personal finance bloggers claiming to have made it. There was doubt the bloggers are really retired. Between the lines you can read “the blogger needs the blog to pay bills”. There were also a few comments protesting the need for a side hustle. I want to set the record straight.

I have no problem as apologist for the “retire early” community of bloggers. I have met many of these fine people and find them to be genuine. There is no fraud, folks. You don’t go into blogging for the money! First you spend a year or more writing your tail off and then only a microscopic number actually turn a profit or any revenue at all. Even fewer make real money. Real world, dear readers. The people writing these blogs are doing it to share their experiences. No more. If it doesn’t hit big it does not mean back to the cubicle; it means, see ya in Tahiti. They are really retired and travel the hell out of the planet. Read More

Entertainment Overload

img_20161101_133227After lifting a set at the gym I pace back and forth gathering my thoughts, focusing on the next set. As I look around the gym all the other people are staring at the TVs plastered along the wall or playing on their cell phone. At the traffic light I take a deep breath and relax. I look over at the car next to me and notice the driver is texting. At the office I always have books on taxes and finance at arm’s length. My free time is filled with learning. During the lunch hour the office is dead quiet as everyone checks their personal email or Facebook.

The above scenes are common. I am certain you have experienced the same thing and more. Our society has devolved into information overload. As a society we can’t sit still for a moment unless we are distracted by some form of mass media. I wonder what Blaise Pascal would think of modern society. Pascal once said, “All of humanities problems stem from man’s inability to sit quietly in a room alone.”  Hell, people can’t stand twenty seconds without checking their smartphone at a crowded party. There are people who actually admit to pollsters they have checked their email during sex. What the fuck is the matter with people!

The More We Get the More We Want

The problem only grows. The more we satisfy this inane hunger the more it demands. Our attention spans continue to shrink. If my math skills were really bad and I applied a straight line to our collective attention span over time, at some point in the very near future our collective attention span would be negative. In other words, we would be distracted to some other pretty light before we even satisfied the first impulse. Oops! Sorry. We already crossed that point.

The lust for another distraction is pervasive. What ever happened to quiet time? Do we take naps anymore? Probably not. The same people willing to interrupt sex for a quick check on the email also check their email overnight. It’s the first thing they do in the morning. Before the emails are finished it is off to check the news and check out some videos and Facebook. How many emails did you respond to? Yeah. Thought so. Too busy moving on to the next distraction. Read More

Hidden Value in Homeowners Insurance

img_20161031_201350Insurance is for the mathematically challenged. Insurance companies have the largest buildings in town for a reason. What other company do you write a check to for a thousand dollars and get nothing more than a promise to cover some bills in the event of certain losses? Commissions to the salesperson can reach or exceed 100% of premiums in the early years of some life insurance policies. Many credit card companies offer free extended warranty insurance at no additional cost when you buy with their card. You can guess the real value of the extended warrantee offered at Wal-Mart on $88 headphones.

Warren Buffett built an empire funded by insurance premiums at Geico. Some insurance is required by law. In the U.S., auto insurance is required for liability. Health insurance is also required since the Affordable Care Act passed.

Insurance is about risk management. Insurance companies are masters at it. The goal for the insurance company is to bring in as much as possible in premiums and pay out as little as possible in claims. Insurance always has a built-in profit for the insurance company. This is the house advantage.

Most insurance claims are for stupid small stuff. The cost of insurance to cover claims under $10,000 is massive. The processing of a claim is expensive. That is why higher deductible can save so much. But even better is not buying insurance at all and pocketing the cash.

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